Mr Offer has been told by senior management at the Countess that it could lose up to 80% of its orthopaedic work.

He said: 'If this does happen, the Countess could lose the staff and skills necessary to operate an Accident & Emergency department.

'Labour has said this is all part of opening the NHS up to market forces, yet the Count-ess's management were not allowed to bid for the ISTC contract.'

The local Primary Care Trust has been forced to buy about £5m worth of operations from ISTCs for 2006-07 as part of an government initiative aimed at shortening waiting lists.

Mr Offer said it was therefore logical for the cash-strapped PCT to persuade GPs to send their patients to it. However, this was at the expense of the Countess.

'The ISTC has a guaranteed income, whether they treat patients or not, yet theCountess ispaidbyresults,'saidMr Offer. 'If patients do go to the Countess, the PCT effectively has to pay twice.'

Local health bosses have told The Chronicle the government has created 'over-capacity' in the NHS. Mr Offer saidthishad happenedinspecificareas including breast reconstruction, ENT and cataract treatment.

'Already we have seen cuts to services and bed closures at the Countess.'

Geoff Ryall-Harvey, of the Patient and Public Involvement Forum, said Mr Offer may be portraying the worst case scenario in suggesting A & E was under threat, but added 'anything is possible'.